State takes San Jose redevelopment fund

While California cities continue to struggle with budget cuts, San Jose is dealing with another blow. The state took millions from its redevelopment fund, so now the city is facing some painful choices.

The agency responsible for breathing life into San Jose's neighborhoods, parks, and downtown, has been cut. The state is taking $62 million of San Jose's redevelopment fund, to balance its budget.

"Just when we thought we had our budget settled, the state comes in and does this, balancing their budget on the backs of local governments," says Harry Mavrogenes, the redevelopment agency executive director.

The agency on Wednesday laid off a quarter of its 100 member staff and will put almost all redevelopment projects on hold. It's a blow to construction workers who've been waiting for projects to start.

"Redevelopment agency funds are essentially public works type projects, if they go away then our unemployment rate could easily reach 50 percent," says Neil Struthers from the Santa Clara Construction and Trades Council.

A costly project at the top of the redevelopment agency's list is to build out the existing convention center.

According to the Chamber of Commerce, if the convention center expansion did happen, it would mean 500 new events could be booked there and as a result 61,000 hotel rooms would be rented out. It would all bring in $43 million to the city and to local businesses.

But now that no project is safe, parents in South San Jose worry a community center slated for an empty lot, won't be built, especially if it's not a big revenue generator.